Should You Buy Tibet Rhodiola Pharmaceutical Holding Co. (SHSE:600211) For Its Upcoming Dividend?

Regular readers will know that we love our dividends at Simply Wall St, which is why it's exciting to see Tibet Rhodiola Pharmaceutical Holding Co. (SHSE:600211) is about to trade ex-dividend in the next 4 days. The ex-dividend date is one business day before a company's record date, which is the date on which the company determines which shareholders are entitled to receive a dividend. The ex-dividend date is important as the process of settlement involves two full business days. So if you miss that date, you would not show up on the company's books on the record date. Thus, you can purchase Tibet Rhodiola Pharmaceutical Holding's shares before the 21st of January in order to receive the dividend, which the company will pay on the 21st of January.

The company's next dividend payment will be CN¥0.262 per share, and in the last 12 months, the company paid a total of CN¥1.53 per share. Calculating the last year's worth of payments shows that Tibet Rhodiola Pharmaceutical Holding has a trailing yield of 4.3% on the current share price of CN¥35.58. We love seeing companies pay a dividend, but it's also important to be sure that laying the golden eggs isn't going to kill our golden goose! As a result, readers should always check whether Tibet Rhodiola Pharmaceutical Holding has been able to grow its dividends, or if the dividend might be cut.

Check out our latest analysis for Tibet Rhodiola Pharmaceutical Holding

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Tibet Rhodiola Pharmaceutical Holding is paying out an acceptable 67% of its profit, a common payout level among most companies. Yet cash flow is typically more important than profit for assessing dividend sustainability, so we should always check if the company generated enough cash to afford its dividend. It distributed 49% of its free cash flow as dividends, a comfortable payout level for most companies.

It's positive to see that Tibet Rhodiola Pharmaceutical Holding's dividend is covered by both profits and cash flow, since this is generally a sign that the dividend is sustainable, and a lower payout ratio usually suggests a greater margin of safety before the dividend gets cut.

Click here to see how much of its profit Tibet Rhodiola Pharmaceutical Holding paid out over the last 12 months.

Have Earnings And Dividends Been Growing?

Businesses with strong growth prospects usually make the best dividend payers, because it's easier to grow dividends when earnings per share are improving. If earnings fall far enough, the company could be forced to cut its dividend. That's why it's comforting to see Tibet Rhodiola Pharmaceutical Holding's earnings have been skyrocketing, up 28% per annum for the past five years. The current payout ratio suggests a good balance between rewarding shareholders with dividends, and reinvesting in growth. Earnings per share have been growing quickly and in combination with some reinvestment and a middling payout ratio, the stock may have decent dividend prospects going forwards.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. In the past 10 years, Tibet Rhodiola Pharmaceutical Holding has increased its dividend at approximately 47% a year on average. Both per-share earnings and dividends have both been growing rapidly in recent times, which is great to see.

Final Takeaway

Is Tibet Rhodiola Pharmaceutical Holding an attractive dividend stock, or better left on the shelf? Tibet Rhodiola Pharmaceutical Holding's growing earnings per share and conservative payout ratios make for a decent combination. We also like that it paid out a lower percentage of its cash flow. It's a promising combination that should mark this company worthy of closer attention.

So while Tibet Rhodiola Pharmaceutical Holding looks good from a dividend perspective, it's always worthwhile being up to date with the risks involved in this stock. Every company has risks, and we've spotted 2 warning signs for Tibet Rhodiola Pharmaceutical Holding you should know about.

A common investing mistake is buying the first interesting stock you see. Here you can find a full list of high-yield dividend stocks.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.